Anyone can be rich. Interested?

Undoubtedly, rich is better. But how would I know unless I’ve been one?

Last week I finished reading a brilliant book – The Richest Man in Babylon. (Rs.197 on Flipkart). A story beautifully told. It has convinced me that that anyone can become rich. Surprisingly, there’s no trick to it. All it takes is a decision: “Yes, I want to be rich”. And, then ‘actions’. Not many, just a few.

The actions won’t just make you rich, they’ll keep you rich too.

I’ve condensed the book into six simple action points, sans the story. If you find them helpful, I urge you to pick up the book and read it. It’s quick read, and quite engrossing.

Give-up one tenth of everything you earn. Keep it aside, don’t ever spend it. No matter what happens. Even in an emergency. But you may ask, when I’m not able to meet my ends with what I earn, how can I put aside 10%? Look around you – at your friends, neighbors and colleagues. Group

1st rule to get rich – Never touch 10% of monthly income

them into three – those how earn about the same as you; those who earn lesser than you, and finally those who earn more than you. Focus your attention on those who earn same or lesser than you. You’ll notice some of them enjoy a better lifestyle than you do. How come? Ask them, and you’ll hear a common a tune – they spend less than you. If they can, why can’t you? All of us can manage similar lifestyle with 90% of our incomes as well. Just requires minor adjustments. And discipline to stick to it.

Audit every expense, no matter how trivial. Before you spend, take a moment to ask yourself – is it really necessary? Are there alternatives? My wife does this, naturally. And she’s rich. I didn’t do this nearly all my life and have ended ‘poor’. I’m doing it for the past few years, but without the rigour. Since I’ve read the book, I doing it dutifully. I’m happy to report I’ve saved myself several thousand rupees in less than a month. Just by asking myself: Is the expense really necessary? Can I do without it? For instance, by just opting for Uber Pool instead of Uber Go, I’ve saved over Rs.3000. I don’t hesitate to board a bus if it’s convenient. By the way, google maps even show bus timings, and distance from bus-stops. Most credit cards give you rewards for spending; use the card instead of cash. I’ve been using my reward points to pay for air tickets and holidays – delightful savings! Last week I postponed replacement of my CD player by opting to repair it (one-tenth the cost). I’m selecting the hotels carefully, preferring comfort to luxury. Eating out is both expensive and unhealthy; doing less of it is good for both financial and biological health. Actually, I’ve not compromised on my lifestyle. Just stopped spending impulsively.

Push yourself, earn more. Explore every possible way of supplementing your income. Take tuitions. Do freelance work. Cultivate some of your hobbies and turn them into sources of income. Learn to write and get paid. Teach in a college. Create your own YouTube channel, and earn for clicks. Advise professionally. Offer your services through Urban Clap – video recording, music, repair an appliance, teach yoga. In Washington DC, I met a Vietnamese Lyft driver (alternate to Uber) who did three jobs, one full time and the other two part-time, including driving. All to make sure he could send his three daughters to college. Many of us do that habitually for children. We can now choose to do it for ourselves, to achieve a new goal – “I want to get rich”.

Take professional advice to invest. The 10% you put aside at the end of first year will add 1.2 month’s income by the end of the year – so you’d have earned 13.2 months of income for a year of work. Isn’t that cool? Now begin investing these funds. Don’t follow your own instincts. Instead, take professional help. From people who do this for living. Though

sometimes your own decisions may bring you windfalls, remember what comes easy, goes easy too. A professional will help you get better returns on your investment over long term; search for right advisor and take his help. Amount doesn’t matter, investing wisely does.

Second principle of investment: Don’t use your investment for any lifestyle purchase. A holiday, a bigger LED TV or Xbox, and like. Use investments to replace expenses. By the way, an investment is something that earns you money. A new car doesn’t earn you money, nor does a more expensive carpet. But a new flat that replaces your current rented accommodation or the one that earns you rent does. Make sure you keep significant savings as liquid investments, like cash in bank. There is nothing safer than money in bank, and it also earns interest.

Protect yourself. In Babylon, 7000 years ago, protecting meant protection from invaders. Babylon ruler invested in building an impregnable wall around the city, backed by a strong army. So, everyone’s wealth could remain safe. In today’s times, the wall around the city is called insurance. Your investments, property and health must be protected against any unforeseen eventuality. The small investment in insurance must be part of your monthly/annual budget, just like rent, food and transport.

Lastly, turn work into your best friend. Work diligently. Don’t avoid it. In fact, be happy to work. David Ogilvy, the father of modern advertising, used to say, “hard work hasn’t killed anyone. On the other hand, boredom can”. Your attitude to work is noticed by everyone. Superiors, subordinates, colleagues, co-workers, clients, vendors. And everyone appreciates people with positive attitude towards their work. Besides keeping you and your organisation happy, such an attitude will generate new opportunities for you. We call them ‘offers’. It’ll earn you endorsements and positive references. In other words, it will bring you luck and opportunities, and always make a positive impact on your career

Ideal budget when repaying loan

There is one more principle, applicable for all those who find themselves in debt.

How to rid yourself of debt?Start by resolving that you will pay all your debtors back. Next, make a list, mentioning against each name the amount of money you owe. Make an estimate of the income you are likely to earn over next three years. Calculate if you were to use 20% of your income to repay, how long will it take you to clear all your debts? You can prepare now an estimate of how much money you can pay each of your debtor every month to clear the entire debt over period of time. Meet each of your debtors and share your repayment plan. Most will be supportive, some would be skeptical, and difficult. Now make sure you keep your repayment commitments, no matter what. Not only will you be debt-free in the next few years, but you’d have also learnt to live within 70% of your income – 10% put aside for investment and 20% used to repay debts. I can vouch for this plan as I’ve recently come out of massive debt, using pretty much the same plan.

That is all to becoming rich. Practice these six principles. And before you know, you’ll not only turn rich, but also stay rich. And enjoy being one! After all, rich is better.

Post script: Still not convinced? Let me illustrate:

Let’s say you are 35, and bring home an income of Rs.50,000 a month. Your income increases @ 5% every year, to reach about 94,000 by 15th year. You invest 10% of your monthly income, and this earns you 10% return per annum. How much money would you end up with at the end of 15 years, assuming you don’t touch the growing wealth? About Rs.24Lakh. That’s nearly a quarter of the total of your income you would have earned during the past years. All by just putting aside 10% of it, or living within 90% of what you earn.How to calculate potential value of your investment?